1st Dec 2021 14:43
(Alliance News) - Shares in Redde Northgate PLC rose early Wednesday after it lifted its dividend amid buoyant half-year trading.
The Darlington, England-based commercial vehicle hire said its six-month performance was ahead of company expectations, with sharp increases in profit and revenue, thanks to higher volumes - almost back to pre-Covid levels - and strong residual resale values on used vehicles.
Shares in Redde Northgate were up 12% at 444.00 pence on Wednesday afternoon in London.
For the six months ended October 31, Redde Northgate posted a pretax profit of GBP71.7 million, more than doubled from GBP25.9 million the year before.
Redde Northgate's profit performance was helped by a 48% increase in profit from the disposal of vehicles to GBP27.0 million, with restriction in vehicle supply supporting high residual values, more than offsetting a 34% drop in the volumes of sold vehicles at 10,100.
Total group revenue grew 10% year-on-year to GBP612.9 million from GBP556.0 million. The Redde business was lifted by a rise in volumes of vehicle accidents and incidents, reaching 90% of pre-virus levels.
The Redde segment - which deals in incident and accident management services - posted a 39% rise in revenue to GBP251.9 million.
Meanwhile, revenue from the Northgate UK & Ireland business increased 3.5% to GBP232.7 million, and from Northgate Spain by 0.3% to GBP135.8 million, due to strong growth in vehicle hires.
However, vehicle sales dropped 29% year-on-year, reflecting the post-lockdown sale of a large number of vehicles in the prior period, and reduced volumes available due to supply restrictions.
Excluding vehicle sales, revenue rose 22% year-on-year to GBP552.9 million from GBP429.0 million.
Redde Northgate declared an interim dividend of 6.0 pence per share, up 77% from 3.4p in the same period a year before.
Looking ahead, Redde Northgate said its increasingly large contract wins have demonstrated a strong platform for further growth, and has driven continued momentum across the business.
As a result, Redde Northgate expects underlying pretax profit for the financial year ending April 30 to be line with consensus, which is at GBP119.4 million, marking a nearly doubled result from GBP59.0 the year before.
In response, broker Peel Hunt "confidently" retained its pretax profit forecast for Redde Northgate at GBP120 million, saying it expects market consensus to tighten around the top of the current range. Analyst Andrew Nussey said the shares offer "excellent value", considering a 5.2% dividend yield and merger and acquisition potential.
Peel Hunt kept its price target on Redde Northgate shares at 500p, 19% above their current market price.
"We are pleased to have delivered a strong H1 performance driven by high demand for our products and services and underlying margin gains," said Redde Northgate Chief Executive Officer Martin Ward.
"Strategically, we have made significant progress leveraging the capabilities of our integrated mobility platform to secure multi-year contract wins which will increase our market share. Our combined product and services offering is unique and unrivalled in terms of scale and infrastructure capabilities."
By Tom Waite; [email protected]
Copyright 2021 Alliance News Limited. All Rights Reserved.
Related Shares:
REDD.L